Telekom Romania: A New Beginning? An Interview with Miroslav Majoros, CEO, Telekom Romania

By Nicolae Oaca - Romania

Telekom Romania, the former Romtelecom and Cosmote Romania, is facing network challenges in one of the most competitive markets in the EU. In the fixed line business, the former Romtelecom is competing with RCS&RDS, UPC Romania, and telcos with larger optical fiber networks, while in the mobile business, the main competitors are Orange and Vodafone, celcos with better national coverage of LTE networks and providing higher speed access. In September 2014 Romtelecom and Cosmote were rebranded under the Telekom logo, while the merger process started in 2013. On January 1, 2016, Miroslav Majoros, an executive with a telecom engineering background and with an MBA from the prestigious Harvard Business School and Stanford Graduate School of Business, came from Slovakia to turn arround Telekom Romania.

One of the main problems behind the Telekom evolution in the last few years was financing. How do you intend to raise funds to develop the business, mobile mainly, to reduce the gap?

The overall investment plans for 2016 amount to over €180 million. Most of the investments will be directed toward optical fiber networks and mobile networks, based on 3G and 4G technologies. The increase in the investments planned, by more than 35 percent compared to the previous year, was more than necessary, given that the local market is extremely competitive, and without putting money in the infrastructure it is impossible to succeed in the long term.

Telekom Mobile lags behind its main competitors from the point of view of LTE networks. What is your strategy to rapidly reduce the gap (with Orange, Vodafone)?

We will continue to develop our LTE infrastructure, as it is one of our strategic objectives. The agreement with Orange represents an immediate support for our plans, but in the medium and long term it is natural to continue developing our own infrastructure.

Telekom Mobile aquired only one 2x5 MHz bloc in the 800 MHz band, while Orange and Vodafone aquired two blocks. What are your intentions to keep pace with your competitors?

Depending on the evolution of the 4G mobile telecommunications market and on the future development of our own network, we might consider acquiring a supplementary block for this bandwidth.

Recently, Deutsche Telekom’s top managers declared that the fiber network is a top priority for Telekom Romania. Why not the LTE network, having in mind that mobile business accounts for two thirds of Romanian telecommunications revenues?

It is not a fixed versus mobile business strategy. We started to operate having in mind an integrated approach, therefore both segments are equally relevant. We will focus on expanding both the fiber and LTE networks, on re-launching the portfolio of fixed-mobile services, and on improving the quality of services for customers.

Telekom–Orange wholesale and national roaming agreements respectively mean giving access to the Telekom fixed network, a strategic asset Orange never could have, and to the Orange LTE network, an asset Telekom already has. How do you comment?

This agreement is a good opportunity for us to provide improved services to our customers. Our main focus is represented by the fixed-mobile convergent packages, under the MagentaONE proposition. Extended coverage for both fixed and mobile networks will help us significantly increase the areas where we can offer our services to customers. Therefore, the national roaming agreement with Orange for access to its 4G and 4G+ networks will enable us to also win new customers who will thus benefit from extended 4G coverage and higher quality of 4G and 4G+ services, in addition to the fixed broadband and best-in-class TV services within Telekom’s integrated bundles. We estimate that we will be able to launch the first commercial packages based on this agreement in May 2016.

How about repositioning Telekom in the Romanian market?

This is a process that started almost two years ago with the rebranding, when Telekom announced a new vision and strategy to further differentiate in a market mainly driven by price. The launch of the integrated fixed-mobile packages was the first step in this process, bringing customers an integrated communications proposition in the market and a new customer experience, with simple, transparent services and convenience — one invoice, one call center, one MyAccount.

We will continue to build on this strategy. We have a strong integrated fixed-mobile proposition, a complete service portfolio for B2B, and a very good TV offer. It is now time to focus more on the next steps of the process and our strategy for how to do this is very clear: by delivering an excellent customer experience and great value for the money to our customers. In the coming period we will therefore focus on expanding our networks, for both fixed and mobile technologies, as the base for innovative, interactive, and converged services, on consolidating our convergent service portfolio, and on improving the customer experience.

The essence of our strategy is to offer great value for our customers through bringing more benefits and competitive, simplified, and innovative services, along with providing a great customer experience through all touchpoints. The lowest price and the cheapest services are not the vision we share for a sustainable industry and for creating value to customers.

Is it part of the strategy to merge DT operations in Romania?

We are heading in this direction. The two companies are aligned operationally and are working in sync to offer an integrated customer experience and to ensure commercial consistency. However, a complete merger is a more subtle process that goes beyond procedures, functions, and structures, up to mentalities and organization culture. At this point there is still work to do in terms of harmonizing the two cultures. This is a process that takes time, no matter what actions you take and how much effort you put in.

Last but not least, the legal merger is a very complex process and is subject to different regulations and various approvals, and not only from the shareholders.

Could RomTelekom have an IPO this year?

It is a shareholders’ matter to decide on what is the best solution for privatization and the proper timing. What I can tell you regarding the status of this process is that for the moment we are waiting for a decision from the Ministry upon the solution that the State will opt for, direct negotiation or IPO. In the meantime, we can only reiterate that Telekom Romania is part of the OTE and DT Groups, which are fully committed to their presence in Romania and the country’s prospects. The recent rebranding and our continuous investments in the local market are evidence of this commitment.